Bull Of The Day: Micron (MU) - Thursday, August 9

Micron (MU - Free Report) has been a Zacks #1 Rank since late May after the company's Analyst & Investor Event when CEO Sanjay Mehrotra raised guidance for Q3 and unveiled their powerful growth plans in multiple markets, including datacenters, mobile, cars, and the IoT.

But the stock has gone nowhere since May as some analysts and investors worry about the coming peak in the semiconductor cycle amid a potential glut of memory products.

And this despite EPS estimates rising again since their Q3 report (FY18 ends in August) on June 20. For fiscal year 2019 (beginning September), consensus profit projections rose from $10.75 to $11.30.

This makes Micron trade at under 5 times forward earnings estimates. Granted, memory chip makers tend to trade in a valuation range of only 5 to 9 times. But from the current market reaction, one might think the end of the cycle was indeed imminent.

A Big Look at the Big-Data Economy

There are also concerns about the impact of escalating trade battles between the US and China, with intellectual property disputes at the center as the world's second-largest economy seeks to build its own technology empire by the year 2025.

But the world's "data economy" as Micron calls it is inextricably intertwined and semiconductor manufacturing and testing happens across multiple borders before a product is finished. This is another reason that tariffs will be harmful to US companies.

More on the tariff tantrums in a moment. First, let's look at what Micron sees for growth in their end markets over the coming years from two slides in the 150-slide deck that they dropped on Wall Street in May...

Kevin Cook was a high-frequency institutional currency trader for nine years, starting with the introduction of the euro currency in 1999. Trading 100 million per day in the hyper-kinetic world of ...
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Kevin Cook was a high-frequency institutional currency trader for nine years, starting with the introduction of the euro currency in 1999. Trading 100 million per day in the hyper-kinetic world of FX spot-futures arbitrage, and making continuous markets for size to the biggest banks and hedge funds in the world, he developed skills in global-macro analysis, technical trading, and large position risk management.

Applying his special focus on the keys to success in short-term trading and the dynamics of probability and risk, Cook went on in 2008 to develop options education for the retail arm of the Chicago options powerhouse PEAK6 Investments.

Cook published important perspectives about the psychological and quantitative fault lines in risk management in the summer of 2008 in SFO Magazine. He also represented PEAK6 as a market analyst on CNBC, Bloomberg, FOX Business, and CNN by providing live commentary on equities, commodities, options, and currencies. And he launched a daily webcast from the CME trading floors on the day that Lehman Brothers collapsed, naming the show Mark2Market to highlight where risk management worked and where it didnt before and during the financial crisis.

In 2011, Cook joined Zacks Investment Research to further expand his equity analysis, research, and trading skills.